This month, things came to a head for South African crypto exchange iCE3, after it notified users that withdrawals would be suspended. One of the oldest exchanges in South Africa, it held only 80,000 accounts, with only a small fraction of those being active. Last month, the exchange suspended trading after finding that account discrepancies existed.
“There’s a cloud of mystery surrounding iCE3. What happened, how it happened, why it happened, and, perhaps, most importantly, who was in charge of their communications,” queried Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“The stunning lack of competency in the exchange’s ability to communicate with their customers — or their lack of willingness to do so — is a primer in how to make a terrible situation even worse.”
Since withdrawals were suspended, the exchange shut down their Facebook page, prompting users to create their own page dedicated to planning their next move. The issue seems to be grounded in a dispute with the exchange’s technology partner.
“When budding crypto-preneurs are looking for technology partners, they’re often looking at who can get them to market for the lowest cost. Let’s be honest, this isn’t the first time an exchange got caught up in a technology debacle related to a vendor who didn’t have a strong background in financial technologies or exchange technology. Not all technology providers are made equal,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list that includes NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“At the end of the day, we are going to continue to see technology malfunctions until the industry, consumers, or regulators normalize a demand for reliable, safe, secure technology stacks. But, this goes beyond technology. Instead of getting in front of the issue, letting users know what happened and where they stand, iCE3 leadership threw up their hands and just let the chips fall where they may,” Gardner opined.
“That doesn’t inspire consumer confidence, and the investors who put their trust into that exchange deserved better. It is time that we, as an industry, really work to normalize good business practices, rewarding innovation, customer service, and security.
“Cryptocurrencies belong to a relatively new industry, and many regulators haven’t caught up to the technology yet, but that doesn’t mean that we should be jockeying for position in the Wild West.”